Why Clients Should Consider Contingent Fee Arrangements

by Karli Sharrow
KS NewsArticlesColoradoQuestions Answered

Many clients dread calling their lawyer to ask important questions out of fear that the moment
their lawyer picks up the phone the billing clock starts in six minute increments. The vast
majority of lawyers follow the time honored tradition of billing hourly for their time, which leads
many clients to become frustrated with enormous legal bills that do not reflect the actual value
added to their cases. The contingent fee arrangement is designed to mitigate against this problem
by re-aligning the incentives so that lawyers are compensated based on results, not time spent
working on the case.

Contingent fee agreements are typically structured so that the client is not billed or expected to
pay any fees until the case is resolved. In exchange, contingent fee agreements contemplate that
the lawyers will be paid a percentage (usually 33-40%) of whatever they are able to recover on
behalf of the client. This offers a number of competitive advantages to clients. Most notably,
the client can be assured that every moment that a lawyer spends on their client’s case is aimed at
maximizing their recovery because both party’s incentives are aligned. In addition, our clients
have peace of mind that they will not have to pay out-of-pocket to fund the case and knowing
that their lawyer will do whatever is necessary to resolve the case. Finally, contingent fee
agreements mitigate against the “scorched earth” defense where wealthy corporations have the
resources to litigate the cases to the point that most clients cannot afford to continue paying their
lawyers and give up.

Clients interested in considering contingent fee arrangements should perform their due diligence
to understand exactly what they are signing up for. While many firms offer similar
arrangements, there are differences that can have a significant impact on the final outcome of the
case. For example, our firm typically advances all of the case costs on behalf of our clients. On
larger cases, this can mean hundreds of thousands of dollars advanced to hire quality experts to
investigate the problems and testify in support of the claims. Potential clients should always ask
whether a law firm will advance costs and if so, to what extent will the firm advance costs and
what will they charge in exchange for advancing costs. Clients should also ask a law firm what
responsibilities the client will owe if they lose the case or if the client elects to terminate
representation before a resolution is reached. These are basic questions that every client should
consider and questions that any respectable contingent fee law firm should be able to answer.
For more information about contingent fee arrangements or the services that our law firm can
offer, please do not hesitate to contact us. Our firm always provides free initial case evaluations
and consultations for its potential clients. If you are experiencing construction defect problems
or having trouble with an underpaid or denied insurance claim, please contact us immediately as
time is not on your side.